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Tax deductions: What is your clothing donation valued at?

Published 3/14/08 (Modified 6/17/11)
By MoneyBlueBook

When I was little I always wondered why my parents bothered to rummage through our closets, cabinets, shoe racks, and sock drawers for assorted clothing every few years. I would see my mom folding and stacking old and outdated clothes that I never wore anymore into black garbage bags and deliver them to the Salvation Army or Goodwill. It wasn't until I started working and earning income that I finally realized why it made sense to take the time to compile old apparel and send them to local charities. Other than the usual altruistic factors, the biggest reason is to take full advantage of the IRS itemized charitable tax deduction for qualified clothing donations.

Not that we all shouldn't be donating to charities out of the kindness of our hearts, but Uncle Sam has provided us an attractive incentive in the form of tax breaks for charitable contributions. Most people are keenly aware that they get a tax deductible write off when they tithe or donate money to a charitable organization like their local church. But some seem to forget that the deduction also applies to noncash donations like clothing, shoes, and furniture, so long as they are in reasonably good condition. Of course, like with all good perks there are ground rules in place to prevent abusive taxpayers from going crazy and taking unfair liberty with the charitable deduction. Without these regulations, you would probably have people assigning all sorts of outrageous valuations on the items they donate ($25 for a used T-shirt complete with holes, for example).

The Charitable Tax Deduction Is Useful Only If You Itemize

The calculation of one's annual tax return usually entails adding up all the income and gains for the year, and then deducting expenses and losses to come up with the final taxable income balance. The IRS provides two primary deduction methods - the simpler standard deduction, which is a flat set amount, and the itemized method, which requires the taxpayer to manually report each individual deduction that he or she qualifies for. The charitable deduction is one of many that falls in the itemized category. The taxpayer has to choose whether to take the standard deduction or to itemize. However, until the total sum of all itemized deductions exceed the standard, it doesn't make sense to itemize. Unless you already carry a hefty home mortgage with itemizable mortgage interest, it probably makes more sense to itemize every other year, and bulk up your donations in those years. When you itemize, charitable contributions should be a key part of your tax reduction plan.

Five Steps To Donating Your Clothes And Getting That Tax Deduction, Without Being Audited

When donating clothes for the tax deduction, the worst thing you can do is to drastically overestimate the donated clothing value and trigger an alarm bell. Triggering a red flag will send the IRS man running to your home to request receipts and proof of your donation. Because charitable donation is one of those tax items frequently abused by taxpayers, the IRS closely scrutinizes such claims. Thus you want to make sure you go by the book:

1) Gather All Your Unwanted Clothes and Organize Them - Most usable articles of clothing, including shirts, jackets, coats, shoes, dresses, socks, neckties, suits, and even underwear may be donated to local thrift shops and charitable institutions. For underwear and socks however, it's important to be aware that the IRS now requires all articles of donated used clothing to be in good used condition or better. It's probably a better idea to avoid worn socks and underwear. While it's true what they say - that beggars can't be choosers, we should still try to respect the dignity of those individuals receiving them. If you want to donate those particular items, I suggest buying a new cheap pair for donation.

2) Make A Detailed Record Of Your Donated Items - While it is likely no questions of your donation will ever arise, it is still important to keep a detailed list of your donation in case questions arise or you get audited on the matter. Try to keep a spreadsheet chart or list of all articles donated, recording information such as the number of clothing articles, the estimated dates of purchase, condition at the time of donation, the assessed fair market value of each item, and perhaps even substantiation of how you calculated and arrived at the particular valuation. Some people also recommend taking digital photographs of each item. I recommend taking photos, especially for those items whose valuation may be a bit high and out of the norm.

3) Assign An Appropriate Fair Market Value For Each Clothing Item - The donation valuation process is generally subjective and you are responsible for assigning the proper value for your charitable donations. There is no exact IRS formula or chart as the agency relies on subjective approximations. However, if you wish to donate more than a total of $500 worth of clothing or other goods to charities, you must complete Section A of Form 8283Non Cash Charitable Contributions, and include it with your federal tax return. A formal donation appraisal by a qualified appraiser is not needed unless you are making a contribution of non-cash property worth more than $5,000. A qualified appraiser is someone authorized to complete Part III, Declaration of Appraiser, of Section B, which must also be included with the tax return in that event.

The IRS permits taxpayers to only deduct the fair market value of the donated clothing and household good. Fair market value is the reasonable price that an ordinary buyer would pay for the item in a regular market situation such as at a flea market, on eBay, or at a thrift shop. Fair market value is not the original purchase cost but the second hand used price that could be obtained in an otherwise efficient market.

There are various used clothing charts and valuation tables on the internet to help determine worth. Both The Salvation Army and Goodwill Industries provide assorted valuation guides on their web sites, which may be used as templates for approximating fair market value. You should keep in mind that the donated value is frequently much less than the original purchase price. If you want additional clarification, please take at look at the official IRS publications on the subject:

Publication 561, Determining the Value of Donated Property - Useful if you want to examine a few valuation scenarios.

4) Deliver Your Donated Clothing To The Charity - Most people donate clothing and other household products through charitable organizations such as their local church, or through Goodwilland the Salvation Army. I recommend visiting their websites to locate one of their many thrift shop locations nationwide where you can bring your bags of donated clothing to. There is no need to make a reservation or appointment. Just deliver your bags of clothing and your categorized list of items. Be sure you have properly compiled your list of donation items before bringing the items to the site. Don't expect the charity to sort the items and do the work for you on the spot.

Usually, the way it works is you drop off your items at the donation site and a staff member provides you with a receipt upon request. Although you are not obligated to obtain a written receipt from the charity if the total value of the donated clothing is under $250, you should still always request one for record keeping purposes. Sometimes, but not always, they'll make a note on the receipt for you about exactly what was dropped off, but the description is usually very general - such as "3 bags of clothing". Other times, they will simply hand you a blank receipt for you to fill out.

Some charitable thrift shop centers allow you to mail your clothing donations in, or even provide large clothing donation boxes where you can leave your clothes. Just be sure to include a self-addressed, stamped envelope so the center can send you a receipt later. Shipping costs are tax deductible as well.

5) Claim the Value Of Your Clothing Donation As A Charitable Deduction On Your Tax Return - Since you went through all the trouble of donating your used clothing, be sure to take the appropriate deduction on your tax return when you file. To claim the charitable tax deduction, you will need to report the value of your donated clothes on Schedule A of Form 1040 as an itemized deduction. The total value of your charitable deductions cannot be more than 50 percent of your adjusted gross income in any single year. However, donations exceeding the 50 percent limit can be carried forward to future years.

As with most things in life, I recommend that you plan ahead before making large clothing donations. If you don't usually carry significant itemizable expenses such as home mortgage interest and taxes, you should save up your donations until you have a sizable amount before making the contribution. While charitable giving is always a worthy cause, it doesn't mean you shouldn't try to fully maximize the tax advantages the government provides.

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"However, until the total sum of all itemized deductions exceed the standard, it doesn't make sense to itemize."

Not sure what this means. I don't itemize, and this is going to be the first time I'll be donating clothes since I left home for college. Came back home, and realized how much clothes I have been hoarding. Living in apartments, you learn to become a minimalist. Anyway, so what exactly is "the standard?" I don't own a house, does that mean I shouldn't itemize my donations at all? i have about 2 and a half paper grocery bags worth of clothes... guessing about a little less than $250 worth on the fair value market. If i get anything, neat. But my main goal is to just get rid of stuff.

Jan Roberg says:January 27, 2009 at 6:50 pm

Tom,
In your case, it looks like you're just going to be donating your old clothes to a good cause and cleaning out your closet. It's still a good thing to do, it just won't help your taxes.
The standard deduction for a single person who doesn't itemize this year is $5,450. That means, when you prepare your tax return, you get to deduct that money from your income and not pay taxes on it. If your parents don't claim you on their tax return (because you're in college) then you also get to claim an exemption of $3,500 on money the federal government won't tax.
People who itemize their deductions, generally have more deductible expenses than what the standard deduction allows. For most people, that means owning a house because of the deductions for mortgage interest and real estate taxes, they itemize their deductions on a form called Schedule A. Other items that can trigger a need to itemize are: paying a high dollar amount for state income taxes, large employee business expenses, casualty losses, and large charitable donations.
For you, Tom, you have your $250 worth of clothing, maybe you have $1,000 worth of state income taxes that were withheld from your job, and maybe you have a few hundred dollars of other deductible expenses. Adding that up wouldn't exceed your $5,450 standard deduction that you're already allowed, so you won't be claiming your clothing donation on your tax return this year. Hope this clears things up for you.

Tom says:February 6, 2009 at 8:02 am

I lost my 86 year old Mother in August and I have donated all of her clothing and household goods to Goodwill and another local charity. All of the items were in "good" or "better" condition, much of it still unused with the original tags. I kept itimized lists of all items, along with the dates and locations of the donations but I have no pictures. I received signed receipts from each donation. Since this was all inheritance, and amounts to slightly over $5000 FMV using either the Salvation Army, Goodwill, or TaxOnline FMV's, how much can I deduct? Should I expect an audit?

Carol says:February 7, 2009 at 2:35 pm

There are books as "Deduct It" that will give you a valuation and guarantee no issues with the IRS. I do not photograph my donated items, but I do list them-- Donna Karan Dress Blouse, Ann Klein dress heels, etc. Remember, as in the post above, if your 86yo mom has a dress 20 years ago, you'll have an issue. Age is a factor. But ifyou are sure of the value and can back it up, take the deduction. So they audit you, you have your papers in order. I married this year and had to move from a 5BR house with clothes in every closet to one I have to share closet space with. Goodwill got a windfall. I listed everything! And yes, it does add up. As my accountant says, "if you lost a $100 bill on your desk would you search?" Of course. Yet we let these deductions slip away just like leaving $100 bills in the trash. The IRS will track you down for $10 if you short pay them. Do your share. But that is all that is required.

Carol says:February 7, 2009 at 2:41 pm

BTW, to add to my post. I said I didn't take pix, but there were some exceptions. I had some beautiful Oscar de la Renta gowns that I did take pix of. If there is something that'll stand out, do an extra effort to document it. Really, with a digital camera, snap away, put all on a CD and throw it in the file. Taking care with documentation (just like a mileage log etc) goes a long way with the IRS.

Sam says:March 4, 2009 at 9:35 pm

Guys, use It's Deductible by TurboTax, it will take care of 99% of your donation documentation issues and help keep your valuations honest. I believe it's free to use when you use the Web version

Nicole says:March 9, 2009 at 3:54 pm

I have a TON of baby clothes that I plan on donating to various charities in my area. I know the total value will be above $500. Is form 8283 if my total is more than $500 total or for each charity? If I donate $300 to x charity and $300 to y charity and $150 to z charity...do I fill out that form because my total is over $500 TOTAL donations, or am I ok because the total is under $500 for each separate charity? Does that make sense?

Penny says:March 16, 2009 at 3:33 pm

Hey Nicole,

You'll have to complete the add'l form based on the Grand Total. Here's how I remember it: $250/max total per visit, $500 max grand Total to avoid extra form, less than $5000 grand total to aviod an appraisal.

I don't take any pics, but I do itemize everything and staple it to my receipts throughout the year (ex: M lavendar Ann Taylor cashmere v neck, $20).

Janine says:March 23, 2009 at 11:26 am

We moved last year and my husband took boxes and bags of things to the GOodwill. I cannot for the life of me remember everthing, we have many, many receipts. Is it true you can just take $25 per bag or box?

Marge says:April 7, 2009 at 1:05 pm

so if you visit charity "a" and give them $250 plus in donations and then visit charity "a" another time and give them $250 plus in donations ....You can only deduct $500 to Charity "a"? But then you also donate $250 to Charity "B".....can you deduct a grand total of $750.00 or not?

Bill says:April 8, 2009 at 3:42 pm

Both my parents died during 2008 i donated most of thes clothes and some house hold items to the salvation army made lists and have reciepts from them the total will be over $500.00 but less then $5000.00 is there a limit i can claim in one year for the donation which forms do i have to use (EX.8283) and how much detail do i need to list (EX. 30 pair of pants @ $10) with a large donation do ihave to worry about the IRS questioning it the was a lot of good condition or better items i cleaned out a large 5 bedroom house. what is the maximum that i can claim. thanks

Stephanie says:April 22, 2009 at 11:16 am

Recently the Salvation Army is claiming the IRS made them stop giving the 25% off to shoppers who bring in a donation. I asked an employee about this, and he couldn't tell me the reason why (said his Manager never told them a real reason). (hmmmmm) They said Goodwill was also stopping the % they give with a donation. I went into the Goodwill store, and they haven't heard anything about this, and I can't believe the IRS would single out one thrift store and not another? Then I found out the Managers get a % of all Softlines (clothing) sold within their store. And an employee told me the 'Red Kettle' doesn't all go to 'World Funds' as Salvation Army wants us to believe. 1/3 goes to paying for the store and employee paychecks, 1/3 goes to a Rehab Center, and 1/3 goes who knows where? (maybe Manager bonuses?) I cannot in good conscious support Salvation Army anymore. I do know I will be shopping Goodwill and donating to Goodwill.

Betsy says:May 11, 2009 at 2:05 pm

Marge,

To the best of my knowledge, there are no upper limits on this type of deduction. This is more about documentation. The IRS requires you have documentation (a receipt from the charity plus the detailed list you create) in your records to support non-monetary deductions of over $250 to a single charity and/or over $500 in total to multiple charities. Hope that helps.

Ann says:June 17, 2009 at 7:59 am

Hi,

We recently went through our clothes and realized we have a lot of clothing items that we do not use anymore. We live in an apartment so yard sale is not an option and since the clothes are in very good condition (my 4 year old didn't wear some at all) we thought donation may be a good idea. The information provided here is very good, thank you for taking the time to share it. I have one last question, I currently don't know what the total value of our donation will be but I estimate it will be higher than 500 dollars. We don't own a house and we don't itemize our taxes which we prepare with Turbotax. Financially speaking - would donation still be a viable option for us? I don't know if it would be higher than the standard deduction.

Joe says:June 22, 2009 at 9:58 pm

Depends on what state you live in whether there is still an advantage.
As an example, in North Carolina, you get a tax credit for charitable contributions on the State Tax Return even though you do not itemize your deductions on the Federal Tax Return.
As far as Federal, you should compute your tax return both ways. Standard deduction and itemized with contributions to see which is better.

amrita agrawal says:July 20, 2009 at 11:13 pm

i am closing down my retail store and i have a lot of merchandize that i don't have the patience to sell. there will be about 5000 pieces. does anyone know of an company that can come and do the appraisal of fair value for me. i live in texas. Also can i just make a list of the items and quantites since i have the inventory information and all items are new. i am sure the fair value is way over $5000

Althea says:July 25, 2009 at 2:22 pm

I have closed my retail store and I have a lot of merchandize that i do not have the time or patience to sell. I am sure there is about 5000 pieces. Do I have to write a full description of each item or can i just make a list and combine items the same such as (jeans) and quantites and list (new) or (resale)? Also can I write off up to the 5000.00 per year until the inventory is gone? Last question is there cap on how much can be deducted per year?

Missy says:August 20, 2009 at 7:24 pm

I wish I knew all of this before the last day of my garage sale when I was giving things away of value!!!

Kim says:September 3, 2009 at 9:59 pm

I have recently lost a lot of weight (5 sizes worth) and have a LOT of clothes I can't wear. In addition to making an itemized list, would it make sense to take pics? Or would the fact that I lost 60 PBS be enough substantiation? Thnx for any advice.

Erin says:September 6, 2009 at 12:17 pm

This is just what I was looking for I have a boat load of old clothes my kids grew out of and I wanted to know how much I could get for each thing. Reading your comments was really helpful too. Thanks.

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information. This website may be compensated by companies mentioned through advertising, affiliate programs or otherwise.